Category Archives: demographics

Ultimate Indicator Shows US Never Recovered From The ’08 Great Financial Crisis, by Christ Hamilton

Posted on March 21, 2018 | 1 comment

Choosing to procreate may be the ultimate expression of optimism. Take a look at what’s happening to birth rates. From Chris Hamilton at economica.com:

The ultimate indicator of personal economic confidence is the determination to perpetuate the species and have children.  The chart below shows annual US births from 1910 through 2017 and it is estimatedthere were 3.84 million births in 2017, nearly a hundred thousand fewer than in 2016.

The 2017 figure is also nearly a half million fewer than the late 1950’s baby boom era peak and likewise below the subsequent mid 2000’s double peak.  The 2017 figure is also nearly six hundred thousand below the Census estimates provided as recently as 2000 and 2008.

To offer some perspective, the chart below shows annual births versus total US population…despite the total population nearly doubling since 1957, the US had 11% fewer children in 2017 than 1957…or 2007.

More poignantly, below is the US childbearing population (those aged 15 to 45 years old)…the red columns represent the annual change while the blue line is the total 15 to 45 year old population.  As can be plainly seen, the growth of the childbearing cohort represented by the “baby boom” on the left dwarfed the growth represented by “millennials”, on the right.  Of course, on a relative basis (%), the millennials represent less than a third the annual quantity of growth than the boomers offered…and millennials high levels of education driven indebtedness and poor quality of employment, etc. mean the quality of growth they represent is even lower than their numbers would indicate.

A last note regarding millennials, their estimated “growth” was never organic (as births essentially never exceeded those during the “boomer” period) and instead was almost entirely dependent on estimates of continued high rates of immigration…the same immigration that has dramatically slowed since the early 2000’s.  Chart below shows the sources of 15 to 64 year old population growth (declining births vs. immigration…annual average per 5 year periods) since 1970.  Given this, there is a high probability that the size of the millennials significantly undershoots estimates.

To continue reading: Ultimate Indicator Shows US Never Recovered From The ’08 Great Financial Crisis

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The Most Important Economic Charts… Aren’t Economic Charts, by Chris Hamilton

Posted on March 10, 2018 | Leave a comment

Demographics can be destiny. From Chris Hamilton at economica.blogspot.com:

The global economy is the sum of its production of goods and services versus its capability to consume those.  This article will outline the mismatch of fast rising capacity versus the deceleration of consumptive capability.

As for productive capacity; mechanization, innovation, technology, and cheap debt have helped ramp up the potential.  Going forward, a flurry of advancements including AI, robots, and autonomous vehicles are among the slew of factors that will drive productive capacity even higher.

Regarding the potential capability to consume; each person is essentially a unit of consumption multiplied by their earnings, savings, and access to credit.  But I really want to focus on the childbearing population (ages 15 to 45 years old) and births to show what is taking place and what is yet to come.  In the charts below, I exclude Africa because they haven’t the earnings, savings, or access to credit to be anything more than a very minor rounding error from a global economic standpoint…but they represent such a large portion of global population growth as to skew the data.  Likewise, African’s represent a very small portion of global immigration (detailed HERE).

Global Childbearing Population (x-Africa)

In the first chart below, maroon columns show the annual change in childbearing population and blue line the total childbearing population.  Annual growth peaking in 1988 at +46 million annually…down over 90% to just +4 million).

Below, the annual change in childbearing population (as a percentage of total x-Africa population…maroon columns) versus total childbearing population (blue line) and adding the federal funds rate (black line) and global debt (red line).  Tellingly, the fed funds rate (approximating inflation) peaked simultaneous to the peak in annual childbearing population growth.  The rise, peak, and now deceleration in the annual childbearing population has essentially been the driver for the rise, peak, and now decelerating growth in demand.  The substitution of fast rising debt for the decelerating population growth is plain.  The subtle uptick in yoy childbearing population change over the next five years is the end of the road for growth…and from there on there is only outright declines likely hand in hand with negative interest rates and parabolic debt creation.

To continue reading: The Most Important Economic Charts… Aren’t Economic Charts

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The Myth of America’s “Stingy” Welfare State, by Ryan McMaken

Posted on March 3, 2018 | 2 comments

That the US doesn’t have a big enough welfare state, and we need more benefits, benefits, benefits, is a perpetually recylced canard that’s especially revolting as the government careens towards bankruptcy. From Ryan McMaken at mises.org:

According to the usual news sources, Donald Trump’s new budget proposal “envisions steep cuts to America’s social safety net” and will “gut social programs.” Most of the cuts were proposed to pave the way for more Pentagon spending.

In truth, Trump’s proposal doesn’t matter, and Congress will set to work piling on more deficit spending for both social programs and for the Pentagon.

But, the debate of “gutting” social programs will no doubt be used to perpetuate, yet again, the myth that the United States is ruled by libertarian social Darwinists who ensure that no more than a few pennies are spent via social programs for the poor.

Now setting aside the question of whether or not social programs are the best way to address poverty, the fact is that the United States spending on social programs is on a par with Australia and Switzerland, and can hardly be described as “laissez-faire.”

Moreover, government spending on healthcare per capita in the United States is the fourth largest in the world.1

Governments in the United States pour money into social-benefits programs at rates typical to a Western welfare state. We can debate whether or not the way this is done is sub-optimal or not, but the fact remains, that if we’re going to talk about social programs, the amount of spending in the US is not low in a global context.

According to the 2016 social expenditure database at the Organisation for Economic Co-operation and Development (OECD), public social spending as a percentage of GDP in the US was 19.4 percent:

spending1_1.png

While it is true the US is hardly the highest on this list, its social spending is higher than that of Canada, Australia, Ireland, and Iceland, all of which we are often told are far more “generous” countries in terms of their welfare states. Indeed, if the typical American leftist were asked if the US should spend as much as Canada or Australia on social benefits, the response is very likely to be an emphatic “yes.”

To continue reading: The Myth of America’s “Stingy” Welfare State

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Chung Kuo, by Doug Casey

Posted on February 24, 2018 | Leave a comment

Many Americans have problems with the idea of an ascendant China, especially when it feels like America is descending. From Doug Casey at internationalman.com:

Chung Kuo

This article is entitled Chung Kuo, which means Middle Kingdom.

The Chinese have long seen themselves as superior to every other race (like almost every race does) and the center of the world. It’s because they were so confident of this that they never ventured out as Europeans did, with a brief exception in the 15th century when a gigantic Chinese fleet, composed of ships vastly superior to those of Europe, ventured as far as Africa. Since dropping the ball on world conquest back then, or at least exporting their culture wholesale, they’ve been in stasis, and on the receiving end of what Europe had to dish out.

The Chinese resent the “gweilo,” or “laowai” (loosely translated in Cantonese and Mandarin respectively as “foreign devil”) for appropriating places like Hong Kong, Macau, Shanghai, and numerous other enclaves. They resent episodes like the Opium Wars, which resolved whether they were to be used as a market for narcotics. They never learned to appreciate lots of foreign soldiers running around their countryside, even though Westerners felt it was a birthright.

Rent 55 Days at Peking for the conventional European view of imperialism during the Boxer Rebellion. Better yet, buy or rent The Sand Pebbles, in my opinion one of the best movies out there—and the book is even more entertaining and educational.

The Chinese absolutely resent the U.S. government parading its aircraft carriers off the China coast as if it owned the place. The U.S. government is not showing strength, it’s displaying arrogance and stupidity by antagonizing a sleeping dragon. And the thought of American politicians—which is to say an assortment of insular lawyers, eggheaded wannabe social engineers, and refugees from Arkansas trailer parks—negotiating with people who’ve been through what the Chinese have, is just scary.

The U.S. government may feel like it can call the shots now because it has a dozen aircraft carriers and a couple thousand fighter planes. But it’s making a serious enemy while it’s going to bankrupt America in a counterproductive projection of force to the other side of the planet. And that’s not all. Because the day will go to the people with the most wealth, not the ones that have the most expensive military hardware.

To continue reading: Chung Kuo

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The Federal Reserve and Trump Intent on “Squeezing Blood from a Turnip”…Or Why Most Americans Are in a No Win Scenario, by Chris Hamilton

Posted on February 13, 2018 | Leave a comment

Economica has some great charts. This batch shows that America’s debt is climbing relative to its ability to service it. From Chris Hamilton at economica.blogspot.com:

According to conventional economic wisdom, growth is the increase in the capacity and production of goods and services, compared from one period to another.  This view deems that the greater the growth in capacity and utilization of that capacity, the greater the economic growth.  Strangely, what this school of thought fails to account for is the basis of the US consumer economy…the quantity of growth among the US population (aka, consumers)?  Or how a population growing ever more slowly can consume a capacity that (thanks primarily to innovation, technology, and ever cheaper and greater debt) is allowing for ever greater production?

The chart below shows three variables from 1790 to present;

  1. Columns are US debt to GDP
  2. Black line is annual total US population growth (%)
  3. Yellow line is annual under 65yr/old US population growth (%)
Given the US is a nation of immigrants, the US has had a naturally high rate of population growth due to this net inflow of immigrants.  However, annual population growth has consistently decelerated from an annual growth rate of 3.1% in 1790 to just 0.6% in 2017 (an 80% deceleration, with all growth now dependent on immigration).  The substitution of more and cheaper debt (likewise corporately and personally) to maintain an unnaturally high rate of economic growth while population growth decelerated is plain.  Also noteworthy is the abandonment of the Bretton Woods agreement in 1971 and the simultaneous shift from net exporter to net importer at progressively higher levels.  ***BTW, the sharp waterfall in population growth in 1918 was tied to the global H1N1 influenza pandemic.
However, gauging potential growth by the under 65yr/old population (yellow line in above chart), the organic basis of growth has nearly ceased (a 95% deceleration).  Why is the lack of under 65yr/old growth important?  Only this population is capable of child birth, this population makes up 90%+ of the work force, and this population (at its peak in earnings from 45 to 55yrs/old) earns and spends double the average 75+yr/old.  It is the under 65 population that utilizes credit while 65+yr/olds are credit averse (for good reason).  This is the segment that traditionally drives the economy but is now absent…and ever more and cheaper debt is the sad substitute.

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What Drives Long-Term National Debt Growth? from the Visual Capitalist

Posted on February 3, 2018 | Leave a comment

The US is in a world of debt trouble. From the Visual Capitalist at visual capitalist.com:

What Drives Long-Term National Debt Growth?

With the current 106% debt-to-GDP ratio, there’s no doubt that today’s government debt is high. The last time the United States reached this mark, it was during the aftermath of WWII in the late 1940s.

But despite nearly historic debt levels, it does not seem that the national debt is a key issue for most citizens and groups. What drives this accumulation of debt in the long run, and at what point does the debt level become so high that it becomes an undeniable and critical issue for the country?

Today’s infographic comes from the Peter G. Peterson Foundation, a NYC-based group that focuses on educating people about the fiscal challenges of growing government debt. The graphic illustrates the main factors driving the debt upwards, as well as the potential impact down the road.

RISING TEMPERATURES

The trouble with debt is that it delays today’s challenges well into the future, making it a tempting short-term solution when other things aren’t working. However, over time, that burden increases steadily, and the situation quickly represents the “frog and boiling water” parable.

So what’s raising the temperature of that water?

Right now, the aging of the Baby Boomers is a key factor, and the amount of people receiving social security benefits will swell from 62 million to 88 million people by 2035. At the same time, Medicare’s hospital trust fund will run out of money by 2029, and the program will only remain solvent until 2034.

Whether it’s the growing enrollment in these programs or the rapidly escalating costs of healthcare itself, more money will be put towards Social Security and healthcare over the coming years.

By about 2045, government spending on major health programs will nearly double in size to greater than 9% of GDP.

BOILING WATER

Today, interest on the debt is equal to about 1.4% of GDP.

However, if the projected pace is maintained, it’s anticipated that interest payments could be equal to 6.2% of GDP by 2047 – this is roughly 2x the average annual amount the federal government spends on education, infrastructure, and R&D combined.

 

To continue reading: What Drives Long-Term National Debt Growth?

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One Day Soon, The Sun Will Not Rise, by Chris Hamilton

Posted on December 7, 2017 | Leave a comment

The Econimica blog has a lot of great graphs, and it usually has a different perspective than everyone else. From Chris Hamilton at econimica.blogspot.com:

When the Q4 US resident population data is released, something that has not happened in the post WWII era will take place.   The population of adults aged 15-64 years old will decline.  This was not supposed to happen and will put an end to seven plus decades of continuous population growth which has meant a growing workforce, a growing consumer base, and growing tax base.  A growing core US population, something considered as sacrosanct as the sun rising, will not happen.  On a year over year basis, where there once were up to 3 million more homebuyers than the previous year, 3 million more car buyers than the year before, 3 million more potential customers…there will be likely be thousands fewer.

Many will assume this is a demographic issue of boomers exiting the working age population…but actually demographics is simply the early onset of a disease that will only progressively worsen.  This is truly a population growth issue, not simply a demographic distribution problem.

The economic system the US and world have adopted are dependent on perpetual growth on a quarter over quarter and year over year basis.  Two negative quarters (or even zero growth) and a recession is called and all the Federal Reserve’s and federal governments tools are employed.

Given the importance of growth, the most important factor in growing the economy is the rising demand represented by a growing population.  But the US fertility rate has been negative for 45 years (chart below) meaning the native population (plus immigrants) have continually failed to replace themselves.

This means US population growth has simply been a story of immigration.  And until 2000, N. America was the primary destination for the majority of the world’s immigrants.  However, since ’00 and particularly since ’05, the migration patterns have significantly changed.

To continue reading: One Day Soon, The Sun Will Not Rise

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Europe’s Migrant Crisis: Millions Still to Come, by Soeren Kern

Posted on December 3, 2017 | 1 comment

It appears that some of the refugee flow into Europe from the Middle East may be abating as Syria and Iraq quiet down, but there is still a huge influx from Northern Africa on its way. From Soeren Kern at gatestoneinstitute.com:

“African exodus of biblical proportions impossible to stop”

  • More than six million migrants are waiting in countries around the Mediterranean to cross into Europe, according to a classified German government report leaked to Bild.
  • “Young people all have cellphones and they can see what’s happening in other parts of the world, and that acts as a magnet.” — Michael Møller, Director of the United Nations office in Geneva.
  • “The biggest migration movements are still ahead: Africa’s population will double in the next decades… Nigeria [will grow] to 400 million. In our digital age with the internet and mobile phones, everyone knows about our prosperity and lifestyle…. Eight to ten million migrants are still on the way.” — Gerd Müller, Germany’s Development Minister.

The African Union-European Union (AU-EU) summit, held in in Abidjan, Côte d’Ivoire, on November 29-30, 2017, has ended in abject failure after the 55 African and 28 European leaders attending the event were unable to agree on even basic measures to prevent potentially tens of millions of African migrants from flooding Europe.

Despite high expectations and grand statements, the only concrete decision to come out of Abidjan was the promise to evacuate 3,800 African migrants stranded in Libya.

More than six million migrants are waiting in countries around the Mediterranean to cross into Europe, according to a classified German government report leaked to Bild. The report said that one million people are waiting in Libya; another one million are waiting in Egypt, 720,000 in Jordan, 430,000 in Algeria, 160,000 in Tunisia, and 50,000 in Morocco. More than three million others who are waiting in Turkey are currently prevented from crossing into Europe by the EU’s migrant deal with Turkish President Recep Tayyip Erdogan.

To continue reading: Europe’s Migrant Crisis: Millions Still to Come

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Debt and Taxes and Perdition, by Andrew P. Napolitano

Posted on November 23, 2017 | 1 comment

Loading up future generations with debt is immoral. Fortunately, future generations won’t pay it. From Andrew P. Napolitano at lewrockwell.com:

Should the government borrow against the future? Should it guarantee higher taxes for your children and grandchildren in return for lower taxes for you?

If government’s moral legitimacy depends on the consent of the governed, as Thomas Jefferson argued in the Declaration of Independence, can the federal government morally compel those who haven’t consented to its financial profligacy — because they are not yet born — to pay higher taxes?

These questions are at the base of the debate — such as it is — in Congress these days over the so-called Republican tax reform plan. But you will not hear these questions even asked, much less answered, on Capitol Hill because the Republican leadership of the House and Senate is afraid that the answers might drive them from power. The same can be said for Democratic leaders when their party controls Congress.

In fact, with the exception of a few courageous senators, such as Rand Paul of Kentucky, and representatives, such as Justin Amash of Michigan and Thomas Massie of Kentucky, most in Congress in both parties think the only limit on the government‘s taxing power is what it can politically get away with at any given moment.

And it gets away with a great deal because vast majorities in both major political parties recognize no moral limits to the government’s sordid pattern of tax, borrow and spend.

The numbers are chilling.

The federal government collects about $2.5 trillion in revenue and spends about $4 trillion, annually. The difference between what it collects and what it spends is made up in borrowing. But it doesn’t borrow money as you or I do or any business does — with a planned schedule to pay back the principal it owes plus interest. Rather, it goes deeper into debt to pay its debts.

To continue reading: Debt and Taxes and Perdition

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The Generational Wheels Are Turning, by Michael Krieger

Posted on November 22, 2017 | Leave a comment

Many cryptocurrency skeptics are older, and don’t understand their appeal to younger generations, who have been systematically screwed (see “The Kids Are Not Alright“) and welcome a currency option outside the control of a government. From Michael Krieger at libertyblitzkrieg.com:

“The electric light did not come from the continuous improvement of candles.”

— Oren Harari

If you only read my stuff sporadically, you might be surprised to hear that I’m actually quite optimistic about the future. The main reason I compose articles highlighting all the frauds, corruption and absence of ethics within our current paradigm isn’t to fill you with fear and dread, but to create awareness. Ignorance is not bliss, and I believe a deep appreciation about how completely broken and opaque the current way of doing things is can provide the spark of inspiration and determination necessary to create a new and much better world

As I’ve stated many times previously, it wasn’t until Bitcoin emerged and I started to understand the implications of it, that I became very encouraged about the future. Prior to that, I saw humanity living under a terminal, predatory system that would eventually consume itself, but I couldn’t see a plausible roadmap toward a better tomorrow. Bitcoin proved to me that not only did such a path exist, but the infrastructure for this better future was being built right in front of our eyes.

I first started writing about the revolutionary implications of Bitcoin in the summer of 2012, and looking back five years later I’m filled with an overwhelming sense of awe and appreciation for all that’s been achieved. While the optimist in me always thought we might get to where we are today, to see it actually happen is nothing short of extraordinary. The incredible energy and global talent that’s entered this space over the past several years brings a gigantic smile to my face. It truly is an idea whose time has come, and the more the concepts of decentralization and trustless systems infect the global consciousness, the more unstoppable they become. I think we’re already there.

To continue reading: The Generational Wheels Are Turning

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